Net long dollar positions have increased for the first time in four weeks. CFTC data further showed that euro net shorts jumped to 42,784 contracts, the largest since February 2020. The Federal Reserve policy meeting in late July triggered a two-way flow in the dollar, even though the central bank raised policy rates by 75 basis points. Against the yen, the dollar on July 27 dropped to a three-week low, as the market viewed Fed Chair Jerome Powell’s comments after the meeting as less hawkish. Powell said based on the strength of employment, he did not believe the U.S. economy was in recession, and a recession was not necessarily required to tame super-heated inflation.
The minutes of the July meeting, however, suggested that the Fed will continue to raise interest rates at the next few meetings but the pace of the rate hikes will be data-dependent. The Fed minutes remained supportive for the dollar. Since the Fed’s July meeting, the dollar index has gained 1.8%. Against the yen, the dollar has slightly eased. . “Despite signs of a potential split emerging within the FOMC (Federal Open Market Committee) about how high rates should go and some visible cracks in the economy, a full-blown recession still seems some way off and policymakers’ resolve to contain inflation is indisputable,” wrote Raffi Boyadjian, lead investment analyst, at forex broker XM. “This is why Treasury yields have been able to recover from their lows ploughed at the start of the month, giving the US dollar, which has been benefiting from renewed safety flows, an extra helping hand.”
In the euro zone, Europe‘s single currency is on a downward trajectory, as the region faced an acute energy crisis and rising risks of recession. Since the beginning of the year, the euro has plunged nearly 12% versus the dollar. It was last down 0.5% at $1.0039. In cryptocurrencies, bitcoin net shorts slid to 93 contracts, from net short bets of 230 a week ago.
This week’s net shorts were the smallest since late January. From late April to early July, speculators were net long bitcoin. On Friday, bitcoin dropped to a three-week low of $21,156 , it was last down 8.6% at $21,182. Japanese Yen (Contracts of 12,500,000 yen) $2.691 billion 16 Aug 2022 Prior week week Long 51,308 52,333 Short 80,199 77,365 Net -28,891 -25,032 EURO (Contracts of 125,000 euros) $5.439 billion 16 Aug 2022 Prior week week Long 199,226 200,088 Short 242,010 234,624 Net -42,784 -34,536 POUND STERLING (Contracts of 62,500 pounds sterling) $2.502 billion 16 Aug 2022 Prior week week Long 44,084 42,219 Short 77,193 76,687 Net -33,109 -34,468 SWISS FRANC (Contracts of 125,000 Swiss francs) $0.671 billion 16 Aug 2022 Prior week week Long 7,773 8,635 Short 12,869 18,417 Net -5,096 -9,782 CANADIAN DOLLAR (Contracts of 100,000 Canadian dollars) $-2.092 billion 16 Aug 2022 Prior week week Long 51,843 46,898 Short 24,976 25,675 Net 26,867 21,223 AUSTRALIAN DOLLAR (Contracts of 100,000 Aussie dollars) $4.16 billion 16 Aug 2022 Prior week week Long 28,835 25,644 Short 88,083 83,232 Net -59,248 -57,588 MEXICAN PESO (Contracts of 500,000 pesos) $0.537 billion 16 Aug 2022 Prior week week Long 108,642 95,572 Short 130,013 123,193 Net -21,371 -27,621 NEW ZEALAND DOLLAR (Contracts of 100,000 New Zealand dollars) $-0.112 billion 16 Aug 2022 Prior week week Long 18,412 18,224 Short 16,643 18,500 Net 1,769 -276.